What’s a su­per PAC to do when its can­di­date drops out?

Su­per PACs have a prob­lem once their fa­vored pres­i­den­tial can­di­dates drop out “A lot of donors prob­a­bly as­sume that the money... has to be used on pol­i­tics”

Bloomberg Businessweek (Asia) - - CONTENTS -

All last year su­per PACs had one goal: raise as much money as pos­si­ble for the can­di­dates they backed. They suc­ceeded. In 2015 the groups, which can col­lect un­lim­ited funds to sup­port po­lit­i­cal causes, amassed about $343 mil­lion on be­half of pres­i­den­tial can­di­dates—an un­prece­dented amount. About $157 mil­lion re­mained in su­per PAC ac­counts on Dec. 31, the last time they were re­quired to file fi­nan­cial state­ments with the Fed­eral Elec­tion Com­mis­sion (FEC); of that, more than half was held by su­per PACs sup­port­ing Repub­li­cans John Ka­sich, Chris Christie, Carly Fio­r­ina, Marco Ru­bio, and Jeb Bush. Those groups spent heav­ily in New Hamp­shire, fu­el­ing more than $40 mil­lion in ad buys in the weeks be­fore the state’s Feb. 9 pri­mary, and an ad­di­tional $12 mil­lion in South Car­olina, where Repub­li­cans will hold their pri­mary on Feb. 20. (Christie and Fio­r­ina an­nounced on Feb. 10 they were sus­pend­ing their cam­paigns.) As other Repub­li­cans come un­der in­creas­ing pres­sure from the party to win or get out of the way, the su­per PACs face a quandary: what to do if they’ve raised more money than they end up spend­ing.

In Septem­ber, Wis­con­sin Gov­er­nor Scott Walker, a fa­vorite of Tea Party ac­tivists, be­came the first ma­jor Repub­li­can to drop out of the race. His cam­paign was go­ing broke af­ter spend­ing lav­ishly on staff salaries and travel, and Walker de­cided to back out rather than in­cur ad­di­tional debt. In Novem­ber he sent out an e-mail so­lic­it­ing do­na­tions to pay off more than $1 mil­lion in out­stand­ing bills. “We feel per­son­ally ob­li­gated to make sure that ev­ery small busi­ness that ex­tended us their good faith and credit is re­paid,” Walker wrote.

Un­in­tim­i­dated PAC, the group sup­port­ing Walker, still had about $20 mil­lion of the $23 mil­lion it had raised to sup­port Walker’s bid. By law, Un­in­tim­i­dated was pro­hib­ited from bail­ing out the cam­paign but faced very few other re­stric­tions. Can­di­dates are strictly reg­u­lated on fundrais­ing and spend­ing, but su­per PACs aren’t

bound by the same safe­guards. “A lot of donors prob­a­bly as­sume that the money they give to po­lit­i­cal com­mit­tees has to be used on pol­i­tics,” says Paul Ryan, deputy ex­ec­u­tive di­rec­tor of the Cam­paign Le­gal Cen­ter, a non­profit watch­dog that’s filed com­plaints against sev­eral su­per PACs. “If they do as­sume that, they’d be wrong.”

Ac­cord­ing to FEC fil­ings, Un­in­tim­i­dated re­funded its sur­plus, about $18 mil­lion. “We never had any thought or plan other than that we would re­turn the funds to the donors,” says Chris Ashby, the group’s lawyer. “We felt like that was the right thing to do.” The big­gest check went to Diane Hen­dricks, a bil­lion­aire who heads the largest whole­sale roof­ing sup­ply com­pany in the U.S. Hen­dricks, a long­time Walker backer, gave $5 mil­lion to Un­in­tim­i­dated; she got $4 mil­lion back. The su­per PAC also re­turned money on a pro­rated ba­sis to Richard and El­iz­a­beth Uih­lein, who own a ship­ping sup­plies busi­ness, and to Mar­lene and Joe Rick­etts, the founder of TD Amer­i­trade, whose fam­ily owns the Chicago Cubs.

Af­ter the Supreme Court cleared the way in its 2010 Cit­i­zens United de­ci­sion for in­di­vid­u­als and cor­po­ra­tions to do­nate un­lim­ited amounts to su­per PACs, many thought the ben­e­fi­cia­ries would be in­ter­est groups that sup­port mul­ti­ple can­di­dates. In­stead, su­per PACs quickly be­came a ve­hi­cle for wealthy donors to pri­vately fi­nance spe­cific can­di­dates. In 2012, Win­ning Our Fu­ture, a su­per PAC cre­ated to sup­port Newt Gin­grich’s pres­i­den­tial bid, raised $23.9 mil­lion, most of it from casino mogul Shel­don Adel­son, his wife, Miriam, and their chil­dren. When Gin­grich dropped out of the Repub­li­can pri­mary race in May 2012, the su­per PAC had $5.6 mil­lion left in the bank; it re­funded $5 mil­lion to Adel­son the day Gin­grich quit.

Not all su­per PACs have fol­lowed that model. Re­store Our Fu­ture, a su­per PAC cre­ated to sup­port Mitt Rom­ney, raised a to­tal of $153 mil­lion and spent al­most all of it on the Repub­li­can’s failed cam­paign against Pres­i­dent Obama. It fin­ished 2012 with less than $500,000 in the bank, though in 2013 it re­ceived about $700,000 in re­im­burse­ments for ads that never ran. Rather than re­turn the re­main­der to donors, Re­store Our Fu­ture ul­ti­mately passed most of its money on to other po­lit­i­cal groups to back Repub­li­can can­di­dates. These in­cluded the Repub­li­can Gov­er­nors As­so­ci­a­tion and another su­per PAC started by Rom­ney called Amer­ica Ris­ing. (Rom­ney, who briefly flirted with mak­ing another run, hasn’t yet en­dorsed any­one.) The group had about $153,000 on hand as of Dec. 31.

In many cases, the peo­ple run­ning su­per PACs keep burn­ing through their cash even as the can­di­dates they’re sup­posed to be sup­port­ing floun­der. “The more calls you can make, the more doors you can knock on, the more ads you can run—at the end of the day, more is bet­ter than less, and all of the above is bet­ter than one or the other,” says Lara Brown, di­rec­tor of Ge­orge Wash­ing­ton Univer­sity’s po­lit­i­cal man­age­ment pro­gram, which of­fers a course in run­ning su­per PACs. Donors of­ten want su­per PACs to do every­thing pos­si­ble to keep even long-shot can­di­dates afloat. “I ex­pect some big-ticket donors, if they know the su­per PAC hadn’t spent all of their money or were sav­ing their fire­power for later, may be ask­ing for re­funds,” says Sheila Krumholz, ex­ec­u­tive di­rec­tor of the non­profit Cen­ter for Re­spon­sive Pol­i­tics, another cam­paign-fi­nance watch­dog.

Some­times the pres­sure pays off. Right to Rise USA, which raised more than $100 mil­lion in 2015 to sup­port Jeb Bush, spent more than $25 mil­lion on ads in New Hamp­shire, in­clud­ing many tar­get­ing Bush’s neme­sis, Florida Sen­a­tor Marco Ru­bio. Bush earned a fourth-place fin­ish in New Hamp­shire, ahead of Ru­bio. It’s enough to keep Bush in the race through South Car­olina, where the group has spent $3.8 mil­lion on TV ads since the be­gin­ning of the year. It held $59 mil­lion at the end of 2015.

While there’s no law pre­vent­ing staffers who run su­per PACs from buy­ing yachts and sail­ing off into the sunset, donors may be able to count on po­lit­i­cal op­er­a­tives’ in­stinct for self­p­reser­va­tion. Only about 85 donors cut checks of $1 mil­lion or more last year. “The folks who are in­volved in fi­nanc­ing and op­er­at­ing su­per PACs are all folks who are pro­fes­sion­als at what they do,” says Un­in­tim­i­dated’s Ashby. “They want to work again in pol­i­tics.”

−Tim Hig­gins

The bot­tom line Su­per PACs with money left over af­ter can­di­dates drop out have to de­cide whether and how to re­turn do­na­tions.

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.